Post Office Schemes

The main financial services offered by the Department of Posts are the Post Office Savings Bank which function on behalf of the Ministry of Finance, Government of India. It is the largest and oldest banking service institution in the country. Under Post Office Savings Bank, more than 20.50 crores savings account are operated through 1,54,000 post offices across the country.

Indian Post offers several Savings Schemes which are backed by the Government of India and are safe, secure and risk-free investment options with no Tax deduction at Source ( NO TDS). The investment options are offered at attractive rates of interest along with facility of nomination and are transferable to any Post Office anywhere in India.

Indian Post offers an array of investment schemes for a variety of investors, including individuals, a girl child. Moreover, few post office investment schemes offer tax benefits up to INR 1.5 lakhs upon investment. The different post office savings schemes and the benefits that we offer to our valuable customers are discussed in detail below.

Post Office Time Deposit

• Post office time deposit comes with different tenure options for investment. The current rate of interest applicable is below:

• The minimum amount that can be invested is Rs. 1000. There is no upper limit. There is no restriction on the number of accounts one can hold.
• Accounts can be opened in single holding or joint holding pattern. An investment in the name of minor is also allowed.
• Accounts can be transferred from one post office branch to another across India.
• Once the time deposit is matured, it will automatically renew for the same tenure again with the prevailing rate of interest on the day of maturity.
• There is a tax benefit for the investment made in the 5-year post office time deposit. The investment qualifies for the deduction under Section 80C of The Income Tax Act, 1961.

National Savings Certificate (NSC)

• The NSC has a maturity period of 5 years. The NSC rate of interest is 6.8% per annum compounded half-yearly but payable at maturity. That means, your investment of Rs. 100,000 will yield you Rs. 1,38,949 after 5 years.
• There is no maximum limit on investment with a minimum amount of investment of Rs.1000. Investments can be done in denominations of Rs.100, Rs. 500, Rs. 1,000, Rs. 5,000 and Rs.10,000.
• The NSC Certificate can be purchased in a single holding, joint holding (up to 3 adults), by a guardian on behalf of a minor/person of unsound mind or by a minor above 10 years in his own name
• Investment in NSC is tax deductible under Section 80C of The Income Tax Act. Interest on NSC is deemed to also be reinvested under Section 80 C and hence tax deductible, except interest in the final year of the NSC.
• NSC certificates can be pledged as security for availing bank loans.
• Certificates are transferable. Transfer from one person to another person is allowed only once during the investment tenure.

NSC is a risk-free and tax-efficient saving scheme for long-term and traditional investors with no risk appetite.

Post Office Recurring Deposit

• Post office RD is basically a monthly investment for a fixed period of 5 years with an interest rate of 5.8% per annum (compounded quarterly).
• On completion of the fixed tenure of five years, RD account with Rs. 10,000 invested every month will fetch you Rs. 3,256.48
• Post Account RD helps small investors by allowing them to invest as little as Rs.100 per month and above minimum any amount in multiples of Rs.10. There is no upper limit for the investment.
• Joint accounts can also be opened by two adult individuals. The account can also be opened in the name of a minor. Multiple accounts can also be opened.
• RD can be transferred from one post office to another.
• There is a default fee of 1 rupee for every 100 rupees in case you miss on any monthly investment.
• The account offers flexibility by allowing a partial withdrawal up to 50% of the balance after a year.

There is no TDS on interest from post office RD. However, income is taxable in the hands of investors as per their individual tax slab. It’s one of the best investment choices for every investor who is looking for a risk-free investment avenue to save some amount every month systematically.

Interest Rate and Taxability on Different Savings Schemes

The interest rate and taxability on different savings schemes are as follows:

Note: *Please refer to the official website of Indian Post for more details of Senior Citizen Savings Scheme.

The above-mentioned interest rates are effective from 1st April 2020 and updated as on 31st January 2022.